Sustaining small businesses in emerging economies: an examination of the pre and post startup ramifications

  • Received August 23, 2016;
    Accepted December 8, 2016;
    Published May 11, 2017
  • Author(s)
    Chux Gervase Iwu
    ORCID
  • DOI
    http://dx.doi.org/10.21511/ppm.15(1-1).2017.10
  • Article Info
    Volume 15 2017, Issue #1 (cont.), pp. 227-236
  • TO CITE АНОТАЦІЯ
  • Cited by
    6 articles
  • 1126 Views
  • 272 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

Set in the Western Province of South Africa, this study is centred on a group of small business owners who received financial support from a leading South African business developer. The main aims were to obtain from the recipients what they envisaged as their main challenges, and to compare those challenges at a later stage to get a better understanding of the real challenges of small business pre and post startup. The ultimate benefit will be to report on these to inform practitioners and researchers so that every stakeholder can have a fresher insight into this phenomenon with the hope that much more concrete discussions and interventions may emerge. This longitudinal study adopted the mixed method, specifically the use of a questionnaire and a semi-structured interview schedule. This method enabled the researcher to gain a better understanding of the issues at play with respect to first time recipients of funds, as well as engage intimately with them in order to obtain salient information regarding challenges of small business pre and post business startup. Interestingly, most participants indicated that almost all the items in the questionnaire were major challenges. This study should not only generate the necessary discussions among practitioners and scholars on small business growth constraints in South Africa, but, at the same time, uncover through such discussions, some of the undocumented challenges of small businesses in emerging markets so that the chances of survival of small businesses beyond the 2-3 year mark are improved.

view full abstract hide full abstract
    • Fig. 1. Breakdown of participants’ profile
    • Fig. 2. Mean (major challenges)
    • Fig. 3. Major challenges versus minor challenges - comparison based on gender
    • Fig. 4. Major challenges versus minor challenges - comparison based on marital status
    • Fig. 5. Major challenges versus minor challenges - comparison based on funds received
    • Table 1. Recommendations to improve entrepreneurship in South Africa
    • Table 2. Questionnaire items
    • Table 3. Fund recipients’ businesses
    • Table 4. Responses per item (major challenges versus minor challenges)
    • Adisa, T. A., Abdulraheem, I., and Mordi, C. (2014). The Characteristics and Challenges of Small Businesses in Africa: an Exploratory Study of Nigerian Small Business Owners. Economic Insights–Trends and Challenges, 3(4), 1-14.
    • Ahl, H. (2006). Why research on women entrepreneurs needs new directions, Entrepreneurship Theory and Practice, 30(5), 595-621.
    • Bear, M., Bradnum, P., Tladi, S., & Pedro, D. (2005). Making retail markets work for the poor – why and how Triple Trust Organisation decided to intervene in the spaza market in South Africa. Washington, D.C.: The SEEP Network.
    • Blanche, M. T., Durrheim, K., & Painter, D. (2012). Research in practice: applied methods for the social sciences. Juta and Company Ltd.
    • Bozionelos, N., Bozionelos, G., Polychroniou, P., & Kostopoulos, K. (2014). Mentoring receipt and personality: Evidence for non-linear relationships. Journal of Business Research, 67(2), 171-181.
    • Bruni, A.G., Gherardi, S., & Poggio, B. (2004). Entrepreneurs-mentality, gender and the study of women entrepreneurs. Journal of Organisational Change Management, 17(3), 256-268.
    • Choto, P., Tengeh, R. K., & Iwu, C. G. (2014). Daring to survive or to grow? The growth aspirations and challenges of survivalist entrepreneurs in South Africa. Environmental Economics, 5(4), 93-101.
    • Eresia-Eke, C.E. & Raath, C. (2013). SMME Owners’ Financial Literacy and Business Growth. Mediterranean Journal of Social Sciences, 4(13):397-406.
    • Gwija, S. A., Eresia-Eke, C., & Iwu, C. G. (2014a). Assessing the impact of support structures and initiatives to youth entrepreneurship development in a selected Township in the Western Cape Province of South Africa. Mediterranean Journal of Social Sciences, 5(1), 61-68.
    • Gwija, S. A., Eresia-Eke, C., & Iwu, C. G. (2014b). Challenges and Prospects of Youth Entrepreneurship Development in a Designated Community in the Western Cape, South Africa. Journal of Economics & Behavioral Studies, 6(1), 10-20.
    • Herrington, M., Kew, J., & Kew, P. (2010). Global Entrepreneurship Monitor (GEM), South African Report 2009. Cape Town: University of Cape Town, Graduate School of Business.
    • Iwu, C. G., & Nxopo, Z. (2015). Determining the specific support services required by female entrepreneurs in the South African tourism industry. African Journal of Hospitality, Tourism and Leisure, 4(2), 1-13.
    • Kohli, A. K., & Jaworski, B. J. (1993). MARKOR. A measure of market orientation. Journal of Marketing Research, 30 (November), 467-477.
    • Kappo-Abidemi, C., Iwu, C. G., & Allen-Ile, C. (2015). Retaining and properly developing employees: could this impact professional conduct? Corporate board: role, duties and composition, 11(3), 84-92.
    • Kesha, D., Iwu, C. G., & Slabbert, A. (2014). Business relationships as a driver of success for small, medium, and micro enterprises (SMMEs) in South Africa. Journal of Economics, 5(1), 37-43.
    • Lerner, J. (1999). The government as venture capitalist: the long-run impact of the SBIR program. Journal of Business, 72(3), 285-318.
    • Maas, G., & Herrington, M. (2007). Global Entrepreneurship Monitor (GEM), South Africa Report 2006. Cape Town: University of Cape Town, Graduate School of Business.
    • Monk, R. (2000). Why small businesses fail? CMA Management, 74(6), 12-13.
    • Nichter, S., & Goldmark, L. (2009). Small firm growth in developing countries, World development, 37(9), 1453-1464.
    • Ntsika Enterprise Promotion Agency. (2003). State of small business in South Africa. Pretoria, Ntsika, Policy and Research Division.
    • Nxopo, Z. (2015). The role of government in empowering female entrepreneurs in the Western Cape, South Africa. MTech thesis, Cape Peninsula University of Technology, South Africa.
    • Okpara, J. O., & Wynn, P. (2007). Determinants of small business growth constraints in a sub-Saharan African economy. SAM Advanced Management Journal, 72(2), 24-35.
Related Articles

  • Selection of the right proxy market portfolio for CAPM

    Rashmi ChaudharyORCID , Priti BakhshiORCID doi: http://dx.doi.org/10.21511/imfi.18(3).2021.02
    Investment Management and Financial Innovations Volume 18, 2021         Issue #3         pp. 16-26 Views: 3053 Downloads: 1540 TO CITE АНОТАЦІЯ

    The purpose of the paper is to select the right market proxy for calculating the expected return, since critically evaluating proxies or selecting the correct proxy market portfolio is essential for portfolio management because the change in the market portfolio proxy affects returns. In this study, monthly data of equity indices are evaluated to find out the better market proxy. The indices taken are BSE 30 (Sensex), Nifty 50, BSE 100, BSE 200, and BSE 500. The macroeconomic variables used in the study are industrial production index (IIP), consumer price index (CPI), money supply (M1), and exchange rate in India. To avoid the influence of COVID-19, the research period was from January 2013 to December 2019 to critically evaluate these proxies in order to find the most appropriate market proxy. This paper reveals a noteworthy relationship between stock market returns and macroeconomic factors, while suggesting that the BSE 500 is a better choice for all equity indices, as the index also shows a significant relationship with all macroeconomic variables. BSE500 is a composite index comprising all sectors with low, mid and large cap securities, therefore it reflects the impact of macroeconomic factors most efficiently, taking it as a market proxy. This study was carried out in the context of India and can be replicated for other countries.

  • Impact of audit committee characteristics on firm performance: Evidence from Bahrain

    Abdulla Al-JalahmaORCID doi: http://dx.doi.org/10.21511/ppm.20(1).2022.21
    Problems and Perspectives in Management Volume 20, 2022         Issue #1         pp. 247-261 Views: 2170 Downloads: 1152 TO CITE АНОТАЦІЯ

    The purpose of this study is to analyze the relationship between different audit committee attributes and company performance in Bahrain. This paper investigates the impact of audit committee independence, size, and meeting frequency on company performance (employing ROE, ROA, and Tobin’s Q). Data from all 14 non-financial publicly listed companies on Bahrain Bourse during 2005–2019 were used. The results revealed that companies with independent audit committees and big audit committees in terms of size are performing poorly. It is also shown that the number of audit committee meetings does not affect company performance. Further, this study failed to find any association between the number of audit committee meetings and company performance. The findings show that shareholders might lack knowledge of the importance of corporate governance mechanisms. The results of this study should be of potential interest to different stakeholders, including regulators, investors, and auditors, in their attempts to improve company performance and monitoring mechanisms in emerging economies.

  • The impact of foreign ownership on corporate governance: evidence from an emerging market

    Rawan Shubita , Moade Fawzi ShubitaORCID doi: http://dx.doi.org/10.21511/imfi.16(2).2019.09
    Investment Management and Financial Innovations Volume 16, 2019         Issue #2         pp. 101-115 Views: 2019 Downloads: 300 TO CITE АНОТАЦІЯ

    This research explores the influence of foreign ownership on non-financial public shareholding firms in the Amman Stock Exchange (ASE). The study involved an investigation into the connection between non-Jordanian ownership and the company growth opportunity, stock liquidity, leverage, dividend policy and business output. The results highlight that foreign ownership can provide improved corporate governance practices by playing a decisive role in increasing the growth opportunity and enhancing the firms’ market valuation, as measured by Tobin’s Q. Moreover, the findings indicate that companies with foreign board membership have better operating performance and higher firm value. The rewards were reaped by foreign investors based on their superior monitoring ability, which affects the decisions made and actions taken by management.

Download Preview
Close
Problems and Perspectives in Management
Problems and Perspectives in Management